Dumb question I’m sure, but how do scrapyards make money?

[ChesterGreySideboard]

I’m watching season two of Making a Murderer and they have just shown a shot of a scrap yard and how full of cars it is and how the business was going well, but is now not making as much money.

Now I might be being really dumb here but I don’t understand how having a huge amount of cars rotting in a field makes money.

People come and take the bits off that they need. We got new doors and wing for my car for a fraction of the cost of new and they're immaculate.

You give someone very little money for their old car. By the time you have sold the bits from the car you have made more money than you paid for it. The good stuff doesnt sit around rotting it is sold to be melted down or stripped for parts very quickly.

Metal sells for a hell of a lot of money.

I don't think metal does sell for a lot of money, unless it's a precious metal. A car scrapyard makes money from selling car parts, is the what you mean.

Metal does sell for a lot of money and can be recycled and reused. If you've ever bought sheet metal, it's not cheap.

They sell scrap as parts, or for the price of the metal. I'm closely linked to a scrap yard and it has a multi million pound turnover.

It metal is valuable why are there mountains of cars in scrapyards? If it is worth a lot of money why aren't the owners selling it

Often it's stockpiled waiting for prices to go up.

Buy low. Sell high.

The premise of a good commodity business!

I took a set of 2 huge wide iron gates to a scrap yard once, I went on the weigh bridge, I got £12 for them

Gutted. Probably cost me that in fuel

I got £100 scrap for my car.
If I wanted to make more I would have to list every single part of the car repeatedly and wait for someone who needs that part, that means storing bits of car aswell.
The scrap yard doesn't, they can wait for people to go and ask for the parts, they then charge for removing it if you can't
Mechanics use scrap yards for parts aswell

Exactly Patti.
I understand wanting to get a part for your car as mentioned up thread but as Patti says why have piles of cars rotting away? The parts are no good any more and if the metal has value then why not sell the metal?

I’m not saying that anyone is doing anything wrong, I just don’t get it.

They will also have waiting lists for car parts so they can contact people who will come straight away for them

Prices of metal fluctuate on the stock market meaning that if you have the space it's worth piling 100s of cars on top of each other waiting for market to rise and then you can sell the same cars for more money.

@WontShareMyAuPair Exactly. The price of metal is not fixed, so yards wait until the best time to sell.

The non ferrous metal is sorted from the ferrous and anything that isn't iron is sold for a good price for recycling. It's pretty big business and worth billions a year. Look up the accounts of local scrap yards near you to see.

Metal is found in the highest priced consumer things. Think cars, RSJ's in the construction industry, the lead from church rooves and jewellery. Many scrap dealers have the resources to 'recycle' ie melt down the valuable parts of these consumer-junked or stolen items, at all hours and which can never be traced. Nobody worries too much because scrap dealing is a mucky job and nothing to aspire to. A mix of black market metal, cash transactions and a perception that scrap dealing isn't a proper job means it is a lucrative business for some.

Then, when the cars piled high are too much for the community to bear, the land gets sold off for £4m for much needed housing.

I know three site operators who have done this.

People risk their lives to strip old buildings of their metal wiring, so there can be a lot of money in it. Its all about the markets as people have said. A few years ago its value went up loads and metal theft became a massive problem.

I imagine a certain amount of money laundering also takes place.

Patroclus

People risk their lives to strip old buildings of their metal wiring, so there can be a lot of money in it.

It is now illegal to for scrap yards to take this.

It's not illegal to take legitamately sourced wire though. When buildings are demolished, all the wire, fire extinguishers, pipes, structural metal, aluminium windows etc are all sent for scrap metals recycling, so will go through a scrapyard.

There is probably some money laundering/tax avoidance going on, but maybe since they can't deal in cash any more, a lot of that has stopped. But it will be a combination of buy low/sell high, and sale of car parts etc.

I did some consultancy work for a scrapyard run by two brothers once. The yard looked like a pile of shite, but it was clear they were both very wealthy men (fancy cars with private plates, expensive jewellry, designer clothes).

BarbaraofSevillle
It's not illegal to take legitamately sourced wire though. When buildings are demolished, all the wire, fire extinguishers, pipes, structural metal, aluminium windows etc are all sent for scrap metals recycling, so will go through a scrapyard.

Thats not the same asPatroclus was suggesting (or at least my take on it)